Gold loses sheen on dollar rebound; platinum rally takes breather

Gold slipped as the $ rebounded on Friday, and platinum took a breather after expectations of a rebound in industrial demand drove a rally to a more than six-year peak and put it on course for its best week in two months.

Spot gold lost 0.5 per cent to $1,816.40 an ounce by 5:51 pm (IST) and US gold futures were down 0.6 per cent at $1,816.30.

“The inverse relationship between gold and the dollar has been strong recently and the rebound in the dollar has had a negative impact,” said David Madden, market analyst at CMC Markets UK.

The dollar edged up 0.2 per cent, reducing gold’s appeal to buyers holding other currencies.

“In the short term, there is little to suggest that the prospects for gold will brighten, as this would require inflation risks to increase noticeably,” Commerzbank analysts said in a note. 

Gold is often seen as a hedge against inflation.

Still, expectations for an economic stimulus package in the United States helped to keep gold prices on course for a first weekly rise in three.

“Our thesis for the next year or two is that equities and gold are going to do well because of inflationary expectations and monetary and fiscal stimulus remain supportive for both,” said Hitesh Jain, lead analyst at Mumbai-based YES Securities, adding that the metal could rise to $1,950 this year.

Spot platinum dropped 1.3 per cent to $1,219.13 an ounce after scaling a more than six-year peak of $1,268.88 on Thursday. The autocatalyst metal was also set for its best week since early December, gaining more than 8 per cent.

“Reports that some futures and derivative exchanges have increased their margin requirements have put the brakes on the demand for platinum,” CMC’s Madden said.

But expectations of a rebound in industrial production and the automotive sector this year should lift the metal, he added.

Silver rose 0.3 per cent to $27.04 an ounce and palladium gained 0.3 per cent to $2,351.47.